Sears Canada to lay off more than 1,600 in latest cost-saving move

Sears Canada Inc. announced the layoffs of more than 1,600 employees late Wednesday, the latest cost-slashing move from the struggling department store chain as it tries to boost its operating performance.

The company, which has sold back the leases of prime stores to landlords to raise cash and has outsourced some IT, apparel design and finance positions in a bid to trim its bloated cost structure, has let go 283 employees in its logistics organization, effective immediately.

It will lay off another 1,345 over the next nine months from three internal customer contact centres, and has contracted that work out to third-party vendor IBM.

“These types of decisions are not made without considerable thought and deliberation,” Douglas Campbell, chief executive, said in a statement.

“We are planning for the future of Sears Canada and taking steps now that will allow us to continue serving customers as a viable national retailer coast to coast in stores and through our direct channel now and in the future.

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“In this case, we firmly believe that these changes are necessary and will allow us to better serve our customers. I thank those leaving Sears for their contribution to the company and wish them all the best in the future.”

The news comes after a 2013 marked by layoffs and store closure plans at Sears Canada, which saw its revenue deteriorate to $4.3-billion in fiscal 2012 from $6.5-billion in 2002, and the declines have continued.

Last week, the company confirmed a statement from distressed parent company Sears Holdings Corp. that its sales at stores open for more than a year had fallen 4.4% in the critical holiday buying period of Nov. 3 to Jan. 6.

The retailer laid off nearly 800 more employees in its head office and parts and service repair businesses in November.

In August, Sears Canada laid off 245 IT and finance employees, following a layoff of 700 in last January in its stores and distribution centres. Sears also laid off 470 employees in late 2011 and early 2012.

Amid the turmoil, the retailer’s moves have many industry watchers wondering whether or not it has a future in this country or whether it will follow in the steps of Zellers — the biggest mass merchant in Canada before Walmart came to town, now replaced here by Walmart’s biggest U.S. rival, Target.

“We ascribe a very low probability to an operating turnaround at Sears Canada,” analyst Keith Howlett of Desjardins Securities wrote in a note to clients last month. “We would anticipate further asset sales.”

In addition to outsourcing operations and laying off employees, Sears Canada has been selling off the leases of some prime locations. In October, the company sold five urban stores back to its landlords for $400-million, including a coveted lease at Toronto’s Eaton Centre which will become a Nordstrom. Last June, Sears announced a $191-million deal to give up its leases at Toronto’s Yorkdale and Square One shopping centres.

And in 2012, Sears struck a $170-million deal with landlord Cadillac Fairview to exit stores in Vancouver’s Pacific Centre, Calgary’s Chinook Centre and Ottawa’s Rideau Centre. It later sold its lease at Calgary’s Deerfoot Mall back to the landlord for an undisclosed amount.